During a recent investor conference call, Morgan Stanley’s Katy Huberty has shared her thoughts on why it would make sense for Apple to enter the car market (via Ped3.0). Huberty noted that the size of the car market alone is a good reason for Apple to do a car.
Huberty explained that the smartphone market is worth $500 billion, with Apple holding nearly a 3rd of it. The mobility market is $10 trillion, which means Apple would only need a 2% share of this market to be the size of their iPhone business.
When asked how Apple would approach autos in terms of outsourcing supply, Huberty said that Apple will be designing the components and every single part of the product itself.
Remember that Apple has also built an extensive financing and trade-in service program as well as exceptional support through AppleCare. Financing and leasing and trade-in programs are incredibly important to a successful auto strategy. We don’t think partnership with another automaker is a real path for Apple.
Morgan Stanley has maintained its overweight rating and $144 price target for AAPL.